Iran Construction Industry Set to Recover

Iran’s construction industry is expected to reach a value of US$36.2 billion by 2021, measured at constant 2010 US dollar exchange rates, according to Timetric’s Construction Intelligence Center (CIC).

According to the report, the construction industry is expected to recover over the forecast period to 2021 following a period of declining activity due to the removal of international sanctions and a rise in oil production and exports. In 2015, Iran and the P5+1 countries – the US, China, France, Russia, the UK and Germany – signed the Joint Comprehensive Plan of Action (JCPOA). Under this plan, the P5+1 countries placed restrictions on Iranian nuclear activities, and in return agreed to establish normal trade activity and economic relations with Iran.

According to the World Bank, in 2016, the country’s oil and gas production increased by 62.0% compared to 2015. That year, the country also received the authority to access its seized international monitory assets worth IRR927.4 trillion (US$30.0 billion). However, in October 2017, the US president, Donald Trump threatened to terminate the JCPOA agreement if major flaws in the agreement are not fixed by the member countries in significant ways. The US wants to stop Iran from building nuclear weapons or intercontinental missiles permanently. If this happens, then it will impact the Iranian economy adversely and the growth of construction industry over the forecast period.

In real terms, the Iranian construction industry’s output declined by 14.9% in 2016, measured at constant 2010 US dollar exchange rates. This was preceded by an annual decline of 16.1% in 2015, 13.0% in 2014, and 10.4% in 2013. This decline can be attributed to the fall in crude oil prices, ongoing international sanctions, and the concomitant slowdown across the economy.

The industry’s output value in real terms is expected to rise at a compound annual growth rate (CAGR) of 2.0% over the forecast period; up from -13.7% during the review period. The industry is consequently expected to rise from a value of US$32.8 billion in 2016 to US$36.2 billion in 2021, measured at constant 2010 US dollar exchange rates.

With a 45.3% share of the total industry’s value in 2016, residential construction was the largest market in the Iranian construction industry during the review period. The market is expected to follow a similar trend over the forecast period, with residential construction accounting for 35.1% of the industry’s total value in 2021.

“The market growth over the forecast period will be supported by rapid urbanization, population growth and positive development in regional economic conditions. The government’s effort to reduce the country’s housing deficit will also help the market to grow over the next five years,” comments Danny Richards, Lead Economist at Timetric’s CIC.

Energy and utilities construction was the second-largest market in the Iranian construction industry during the review period, accounting for 23.7% of its total value in 2016. The market is expected to increase in importance over the forecast period, to account for 30.5% of the industry’s total value in 2021. Over the forecast period, the market will be supported by the government’s plans to meet the growing demand for power, and focus on developing renewable energy infrastructure.

About this report

This information is taken from the Timetric report: ‘Construction in Iran- Key Trends and Opportunities to 2021’.

To find out more information about the report, please contact us at reports@timetric.com. To purchase the full report, click here

About the Construction Intelligence Center

The Construction Intelligence Center (CIC) is the most comprehensive source of data and analysis on the global construction industry. The Construction Intelligence Center is a product of Timetric, which provides information solutions and technologies that enable organizations to drive business value and manage business risk.

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